11 January 2017
Cobham Post-close Trading Update
Cobham plc ('Cobham' or 'the Group') today provides a post-close trading update in respect of its results for the year ended 31 December 2016.
2016 Trading update
Group trading profit1 in the unaudited draft management accounts for the year ended 31 December 2016 is £245m, below the range of £255m to £275m set out in the Trading Update of 24 October 2016. The detailed year end close and audit is ongoing but is not expected to result in an increased trading profit. The new management team is commencing a thorough closing balance sheet review, including major contracts and asset carrying values. The trading profit disclosed above is before any adjustments that may arise from this review and, in particular, there is significant uncertainty surrounding the outcome of the KC-46 tanker programme. Cobham remains in discussions with its customer on the commercial terms for the complex conformity and qualification phases of this contract, which are taking place concurrently with the early phase of production.
Financial position and dividend
The Group's draft managements accounts indicate net debt at 31 December 2016 of £1.03bn (2015: £1.21bn) at the closing rate of $1.24/£, which is again before detailed year-end close reviews and unaudited.
In the light of the disappointing trading and higher than expected net debt, the Board will not be recommending a final dividend payment in respect of financial year 2016. The dividend policy for 2017 and beyond will be set out following a full review of the Group's financial situation.
Cobham's preliminary results for the year ended 31 December 2016 will be announced on 2 March 2017.
This document has been determined to contain inside information.
There will be a conference call for investors and analysts at 08.00 UK time on Wednesday, 11 January. The call can be accessed by ringing +44 (0)203 009 5710, code 51675959. A replay facility will be available until 18 January, by dialling +44 (0)1452 550000, code 51675959.
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David Lockwood, Chief Executive Officer
David Mellors, Chief Financial Officer
Julian Wais, Director of Investor Relations
Michael Harrison/Charles Pemberton
+44 (0)1202 882020
+44 (0)1202 882020
+44 (0)1202 857998
+44 (0)20 7404 5959
1. The Group includes within its published statements non-GAAP measures including trading profit and underlying earnings results. Trading profit has been defined as operating profit from continuing operations excluding the impacts of business acquisition and divestment related activity and business restructuring costs as detailed below. Also excluded are changes in the marking to market of non-hedge accounted derivative financial instruments, impairments of intangible assets and items deemed by the Directors to be of an exceptional nature.
Business acquisition and divestment related items excluded from trading profit and underlying earnings include the amortisation of intangible assets recognised on acquisition, adjustments to businesses held for sale, the writing off of the pre-acquisition profit element of inventory written up on acquisition and other direct costs associated with business combinations and terminated divestments. Business restructuring costs relate to the restructuring of the Group's portfolio which are incremental to normal operations. In 2016, these relate primarily to the integration of the Aeroflex businesses acquired in 2014.
2. This document contains 'forward-looking statements' with respect to the financial condition, results of operations and business of Cobham and to certain of Cobham's plans and objectives with respect to these items.
Forward-looking statements are sometimes but not always identified by their use of a date in the future or such words as 'anticipates', 'aims', 'due', 'could', 'may', 'should', 'expects', 'believes', 'intends', 'plans', 'targets', 'goal', or 'estimates'. By their very nature forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that may or will occur in the future.
There are various factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, changes in the economies, political situations and markets in which the Group operates; changes in government priorities due to programme reviews or revisions to strategic objectives; changes in the regulatory or competition frameworks in which the Group operates; the impact of legal or other proceedings against or which affect the Group; changes to or delays in programmes in which the Group is involved; the completion of acquisitions and divestitures and changes in commodity prices, inflation or exchange rates.
All written or verbal forward-looking statements, made in this document or made subsequently, which are attributable to Cobham or any other member of the Group or persons acting on their behalf, are expressly qualified in their entirety by the factors referred to above. Cobham does not intend to update these forward-looking statements.
3. Cobham is a leading global technology and services innovator, respected for providing solutions to the most challenging problems, from deep space to the depths of the ocean. We employ around 11,000 people on five continents, and have customers and partners in over 100 countries, with market leading positions in: wireless, audio, video and data communications, including satellite communications; defence electronics; air-to-air refuelling; aviation services; life support and mission equipment.